Risk & Economy » Diversity » Why finance needs to think inclusively

Why finance needs to think inclusively

To attract the best talent finance needs to be seen as an inclusive, says Fiona Wilkinson, ICAEW president.

Over the last few years, calls to increase diversity in workplaces and to be more inclusive have grown louder. Most people now recognise that increasing diversity, by hiring people of different genders, ethnicities, ages and backgrounds, brings benefits which can help increase growth and success for businesses.

The finance industry, and the accountancy profession, have perhaps stereotypically been seen by outsiders as full of men in suits, and not as welcoming to people from diverse backgrounds. This is an image the profession needs to lose; if we want to attract the best talent then we need to be seen as an inclusive profession for people from all backgrounds.

Increasing diversity and inclusion in the accountancy profession has always been important to me. In the past I’ve been president of the ICAEW South West District Society, where one of my focuses was to increase the diversity of the committee by encouraging younger members, women and students to become more involved. I’ve also served as chair of ICAEW’s Diversity Advisory Group. Now I want to use my time as ICAEW president to continue encouraging more inclusion in the accountancy profession.

Why is being an inclusive organisation a good thing?

Having a diverse and inclusive workforce can benefit organisations in several different ways. Firstly, since members of diverse teams come from different backgrounds, they are more likely to avoid “group think”, challenge each other more effectively and, thus, make better decisions. They are often able to come up with more innovative ideas and solutions than teams who come from similar backgrounds and have similar outlooks.

It’s also been shown that companies with a more diverse workforce are more likely to perform well financially. Research from McKinsey & Company found that companies in the top-quartile for gender diversity on executive teams were 21% more likely to outperform others on profitability.

Having an inclusive workforce also benefits companies by making it easier to hire and retain the best talent. These days many people, especially young people, place a high importance on working for companies which have positive cultures and are welcoming to people of different backgrounds. If your organisation is diverse you’ll give yourself the best chance of making people want to join your business.

Since 2017 it’s been compulsory for companies with more than 250 members of staff to report their gender pay gap figures. Some firms have also begun publishing their ethnicity pay gaps, including Deloitte and PwC. Many companies who have published their pay gaps, and which have had large pay gaps, have faced negative publicity and accusations of unfair remuneration practices.

It is, however, important to understand that gender and ethnicity pay gaps are not necessarily indicative of equal pay issues.  What they do demonstrate is that there are power gaps; men and white people tend to earn more than women and ethnic minorities because they hold more senior positions in organisations.

Pay gaps indicate, for example, that there may be issues in the criteria used to assess employees for promotion.  Many organisations state that they are meritocracies and promote “on merit” but “merit” can be hard to define.  Senior management may be promoting people who act, think and behave like them believing this to be indicative of merit but leading to “group think” and a lack of innovation.

How is the finance profession doing?

A recent survey found that 54% of accounting firms had no partners from ethnic minority backgrounds, and 27% of firms had no accountants at all from ethnic minority backgrounds. This shows that many firms are not hiring people from diverse ethnic backgrounds and that, when they do, they’re not progressing to senior roles.

The same survey also found that just 18% of partners at the top UK accountancy firms are women, compared to 82% men, even though 45% of qualified accountants at the firms were female. This again shows that while firms are hiring women, they are still not progressing to senior levels at the same rate as men.

Other research has found that only ten firms in the FTSE 100 have female Chief Financial Officers, another illustration of how women are not progressing into senior jobs in finance.

What can the finance profession do to become more inclusive?

Historically the way accountants work was modelled to favour men – working hours were often male-orientated and insufficient thought was given to flexible or part-time working to allow for childcare commitments. Attributes such as assertiveness and confidence were seen as positive traits in men but simply as bossiness in women.

Many firms in the past have also perhaps been unaware of cultural differences which may affect people from ethnic minorities and have not taken this into account when helping those staff members progress. For example, when people from minority ethnic backgrounds exhibit unassuming behaviour or a reluctance to take part in certain events, this may be misinterpreted as a lack of confidence, or wrongly attributed to an inability to fit in.

Ways of working and thinking need to be changed, to allow people from other backgrounds to succeed in the profession.

More can also be done to improve inclusion in the profession by improving social mobility. ICAEW is part of Access Accountancy, a social mobility initiative driven by professional bodies and firms across the accountancy profession. It was established to help talented students from disadvantaged backgrounds gain access to accountancy firms via a school outreach programme, to help them understand routes into the profession and get tailored practical experiences of work.

Ways in which the group suggests that social mobility can be improved include:

  • For organisations to ensure they have a senior member of staff who has accountability for encouraging socio-economic diversity;
  • Ring-fencing a proportionate number of places for students from under-represented groups on internship and work-experience programmes;
  • Avoiding using A-Level (or equivalent) grades as a single filter for talent when recruiting. Where A-Level grades are used, they should be considered in the context in which they were achieved.

At ICAEW we also provide tools to empower accountancy firms to encourage more diversity in their workforces. Part of our commitment to support the diversity agenda and ensure the chartered accountancy profession is a truly inclusive one has been to create a Diversity Community. This outlines ICAEW’s work in promoting diversity, alongside supplying resources and information to support individual members and firms wanting to promote diversity within their organisation. It’s especially aimed at smaller firms and those outside London.

Companies today talk more about commitments to diversity but these words must be put into action.  We can’t be said to be a truly diverse and inclusive profession when only one in ten of FTSE 100 CFOs are women. The accountancy profession must truly embrace inclusivity and diversity with all the benefits it brings to business.

Next year ICAEW will be celebrating the centenary of Mary Harris Smith, who was the first ever woman to become a chartered accountant, and the first to become a member of ICAEW in 1920, following the passing of legislation in 1919 which made it illegal to deny women access to the professions. She applied several times to join the Institute, but was turned down before finally being accepted when she was in her 70s.

I want to recognise her resilience and persistence in achieving her goal; I think that she must have been a truly remarkable woman.  ICAEW will be recognising the centenary with events held to celebrate our female members all over the world. I’m sure Mary would be interested to see the progress that has been made with inclusion in the profession. I’ve also seen progress from the start of my own career, when I was usually the only woman on an audit and women made up just 10% of the profession, to where we are now with roughly 50% of new members now being female .

There’s still progress that can be made however, to ensure that those from diverse backgrounds are able to progress into higher levels in accounting firms. Elements from initial recruitment to in-career training, and support in large and small accountancy firms must be improved.

People from diverse backgrounds should be encouraged and driven to have higher aspirations and given more support to get right to the top.

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